0001213900-13-002221.txt : 20130506 0001213900-13-002221.hdr.sgml : 20130506 20130506142555 ACCESSION NUMBER: 0001213900-13-002221 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20120930 FILED AS OF DATE: 20130506 DATE AS OF CHANGE: 20130506 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLERAYDE SAB, INC. CENTRAL INDEX KEY: 0001456993 STANDARD INDUSTRIAL CLASSIFICATION: SECONDARY SMELTING & REFINING OF NONFERROUS METALS [3341] IRS NUMBER: 264065800 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-157565 FILM NUMBER: 13815549 BUSINESS ADDRESS: STREET 1: 1 MEADOW ROAD, NEW BALDERTON, NEWARK CITY: NOTTINGHAMSHIRE STATE: X0 ZIP: NG243BP BUSINESS PHONE: 44-1636-613609 MAIL ADDRESS: STREET 1: 1 MEADOW ROAD, NEW BALDERTON, NEWARK CITY: NOTTINGHAMSHIRE STATE: X0 ZIP: NG243BP FORMER COMPANY: FORMER CONFORMED NAME: RESOURCE EXCHANGE OF AMERICA CORP. DATE OF NAME CHANGE: 20100505 FORMER COMPANY: FORMER CONFORMED NAME: Mobieyes Software, Inc. DATE OF NAME CHANGE: 20090224 10-Q/A 1 f10q0912a2_allerayde.htm QUARTERLY REPORT f10q0912a2_allerayde.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q/A
Amendment No.2

  x  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2012

      o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
For the transition period from ______ to _______

Commission File Number: 333-157565
 
Allerayde SAB, Inc.
(Exact name of registrant as specified in its charter)
 
Florida
 
26-4065800
(State of incorporation)
  
(I.R.S. Employer Identification No.)
 
1 Meadow Road, New Balderton, Newark
Nottinghamshire, UK NG243BP
 (Address of principal executive offices)
 
44-1636-613609
 (Registrant’s telephone number)

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨  No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨  No x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨
Accelerated filer  ¨
   
Non-accelerated filer ¨
Do not check if a smaller reporting company
Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
 
APPLICABLE ONLY TO CORPORATE ISSUERS

As of May 6, 2013,  the registrant had 89,005,250 shares of common stock, par value $.0001 per share issued and outstanding.
 
 
 

 
 
EXPLANATION NOTE

The purpose of this Amendment No.2 to the Quarterly Report on Form 10-Q/A of Allerayde SAB, Inc., formerly Resource Exchange of America Corp. (the “Company”) for the quarter ended September 30, 2012 is being filed to amend the financial information in Part I of the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2012 which was filed with the Securities and Exchange Commission (“SEC”) on November 19, 2012 (the “Form 10-Q”) and Amendment No.1 to the Company’s Quarterly Report on Form 10-Q/A for the period ended September 30, 2012 which was filed with the SEC on January 30, 2013 (the “Amendment No.1”).

Except as described above, no other parts of the Quarterly Report are being amended.

 
 

 
 
TABLE OF CONTENTS
 
  
Page
   
PART I.        FINANCIAL INFORMATION
 
  
 
ITEM 1.
FINANCIAL STATEMENTS
4
     
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
5
     
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
7
     
ITEM 4.
CONTROLS AND PROCEDURES
7
  
 
PART II.      OTHER INFORMATION
 
  
 
ITEM 1.
LEGAL PROCEEDINGS
8
     
ITEM 1A.
RISK FACTORS
8
     
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
8
     
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
8
     
ITEM 4.
MINE SAFETY DISCLOSURE
8
     
ITEM 5.
OTHER INFORMATION
8
     
ITEM 6.
EXHIBITS
8
 
 
 

 
 
Special Note Regarding Forward-Looking Statements

Information included in this Form 10-Q/A contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Allerayde SAB, Inc. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or "ASAB" refers to Allerayde SAB, Inc.
 
PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
 
ALLERAYDE SAB, INC.
Consolidated Financial Statements
September 30, 2012
(Expressed in US dollars)
(unaudited)
 
 
Index
   
Consolidated Balance Sheets
F-1
   
Consolidated Statements of Operations
F-2
   
Consolidated Statements of Cash Flows 
F-4
   
Notes to the Consolidated Financial Statements
F-5
 
 
4

 
 
ALLERAYDE SAB, INC.
Consolidated Balance Sheets
(Expressed in US Dollars)

   
September 30,
   
December 31,
 
   
2012
   
2011
 
   
$
   
$
 
   
(unaudited)
         
                 
ASSETS                
                 
Accounts Receivable
   
4,000
         
                 
Total Assets
   
4,000
     
-
 
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
               
                 
Current Liabilities
               
                 
Accounts payable
   
28,033
     
28,033
 
Accrued liabilities
   
75,500
     
75,500
 
Accrued interest payable
   
129,375
     
87,030
 
Due to related parties (Note 3)
   
424,592
     
405,345
 
Loans payable (Note 4)
   
30,555
     
30,555
 
Convertible debt (Note 5)
   
1,451,269
     
1,428,061
 
Derivative liabilities (Note 6)
   
-
     
697,293
 
                 
Total Liabilities
   
2,139,324
     
2,751,817
 
                 
Stockholders’ Deficit
               
                 
Preferred Stock Authorized: 100,000,000 preferred shares. No shares issued and outstanding at September 30, 2012 and December 31, 2011
               
Common Stock Authorized: 400,000,000 common shares, $0.0001 par value Issued and outstanding: 786,328 shares
   
79
     
79
 
Additional paid-in capital
   
53,300
     
53,300
 
Accumulated deficit
   
(2,188,703
)    
(2,805,196
)
                 
Total Stockholders' Deficit
   
(2,135,324
)    
(2,751,817
)
                 
Total Liabilities and Shareholders' Deficit
   
4,000
     
-
 
 
(The accompanying notes are an integral part of these consolidated financial statements)

 
F-1

 
 
ALLERAYDE SAB, INC.
Consolidated Statements of Operations
(Expressed in US Dollars)
(unaudited)

   
Nine Months
Ended
   
Nine Months
Ended
 
   
September 30,
   
September 30,
 
   
2012
   
2011
 
    $     $  
             
Revenues
    -       49,257  
                 
Cost of revenues
    -       40,628  
                 
Gross Profit
    -       8,629  
                 
Operating Expenses
               
                 
Depreciation
    -       75  
Selling, general, and administrative
    -       51,912  
Professional fees
    16,000       257,706  
                 
Total Expenses
    16,000       309,693  
                 
Loss from Operations
    (16,000 )     (301,064 )
                 
Other Income (Expense)
               
Debt Forgiveness
    -       29,732  
Accretion of discounts on convertible debt
    (3,208 )     (597,864 )
Gain on change in fair value of derivative liabilities
    697,293       641,325  
Interest expense
    (61,592 )     (67,792 )
                 
Total Other Income (Expense)
    632,493       5,401  
                 
Net Income (Loss) for the Period
    616,493       (295,663 )
                 
Net Income (Loss) Per Share, Basic
   
.784
      (.390 )
                 
Net Income (Loss) Per Share, Diluted
   
.093
      (.053 )
                 
Weighted Average Shares Outstanding
   
786,328
     
757,832
 
 
(The accompanying notes are an integral part of these consolidated financial statements)

 
F-2

 
 
ALLERAYDE SAB, INC.
Consolidated Statements of Operations
(Expressed in US Dollars)
(unaudited)
 
   
Three Months
Ended
   
Three Months
Ended
 
   
September 30,
   
September 30,
 
   
2012
   
2011
 
   
$
   
$
 
                 
Revenues
   
-
     
-
 
                 
Cost of revenues
   
-
     
-
 
                 
Gross Profit
   
-
     
-
 
                 
Operating Expenses
               
                 
Depreciation
   
-
     
-
 
Selling, general, and administrative
   
-
     
10,424
 
Professional fees
   
16,000
     
51,898
 
                 
Total Expenses
   
16,000
     
62,322
 
                 
Loss from Operations
   
(16,000
)    
(62,322
)
                 
Other Income (Expense)
               
Debt Forgiveness
           
29,732
 
Accretion of discounts on convertible debt
   
-
     
(223,505
)
Gain/(Loss) on change in fair value of derivative liabilities
   
118,169
     
(276,542
)
Interest expense
   
(20,673
)
   
(21,081
)
                 
Total Other Income (Expense)
   
97,496
     
(491,396
)
                 
Net Income (Loss) for the Period
   
81,496
     
(553,718
)
                 
Net Income (Loss) Per Share, Basic
   
.104
     
(.716
)
                 
Net Income (Loss) Per Share, Diluted
   
.012
     
(.098
)
                 
Weighted Average Shares Outstanding
   
786,328
     
773,240
 
 
 
F-3

 
 
ALLERAYDE SAB, INC.
Consolidated Statements of Cash Flows
(Expressed in US Dollars)
(unaudited)
 
   
Nine Months Ended
   
Nine Months Ended
 
   
September 30,
   
September 30,
 
   
2012
   
2011
 
   
$
   
$
 
Operating Activities
               
                 
Net income (loss) for the period
   
616,493
     
(295,663
)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
               
Accretion of discounts on convertible debt
   
3,208
     
597,864
 
Depreciation
   
-
     
75
 
Professional fees paid through issuance of convertible debt
   
16,000
         
Fixed assets exchanged for settlement of legal expenses
   
-
     
1,233
 
Gain on change in fair value of derivative liabilities
   
(697,293
)
   
(641,325
)
Gain on forgiveness of debt
           
(29,732
)
Changes in operating assets and liabilities:
               
Prepaid expenses
   
-
     
2,000
 
Accounts payable
   
-
     
19,858
 
Accrued liabilities
   
-
     
10,500
 
Accrued interest payable
   
42,345
     
43,794
 
Due to related parties
   
19,247
     
137,470
 
                 
Net Cash Used In Operating Activities
   
-
     
(153,926
)
                 
Investing Activities
               
                 
Proceeds from note receivable
   
-
     
3,361
 
                 
Net Cash Provided By Investing Activities
   
-
     
3,361
 
                 
Financing Activities
               
                 
Repayments of loans payable
   
-
     
(183,232
)
Proceeds from loans payable
   
-
     
45,964
 
Proceeds from convertible debt
   
-
     
125,000
 
Repayment of convertible debt
   
-
     
(4,515
)
                 
Net Cash Used in Financing Activities
           
(16,783
)
                 
Change in Cash
   
-
     
(167,348
)
                 
Cash, Beginning of Period
   
-
     
167,728
 
Cash, End of Period
   
-
     
380
 
                 
Supplemental Disclosures:
               
Non-cash Financing Activities
               
Professional fees and receivable established through issuance of convertible debt
   
20,000
         
Interest paid
   
-
     
25,298
 
Income taxes paid
   
-
     
 
Inventory acquired through loan payable
   
-
     
20,268
 
Inventory transferred to an outside party for full satisfaction of  loan payable
   
-
     
(20,268
)

(The accompanying notes are an integral part of these consolidated financial statements)
 
 
F-4

 
 
ALLERAYDE SAB, INC.
Notes to the Consolidated Financial Statements
September 30, 2012
(Expressed in US dollars)
(unaudited)

1. Nature of Operations and Continuance of Business

Allerayde SAB, Inc., formerly known as Mobieyes Software, Inc. (the “Company”) was incorporated under the laws of the State of Florida on January 15, 2009. On February 23, 2010, the Company changed its name to Resource Exchange of America Corp. Effective April 30, 2013, the Company changed its name to Allerayde SAB, Inc. The Company’s prior business was a mobile enterprise software company aimed at improving productivity of field service organizations. Upon completion of the acquisition of assets from UTP Holdings, LLC on February 22, 2010, the Company adopted the business of UTP Holdings, LLC. The Company is now engaged in the business of recycling ferrous and nonferrous metals to customers in the United States and abroad.

These consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary debt or equity financing to continue operations, and the attainment of profitable operations. As at September 30, 2012, the Company has a working capital deficit of $2,135,324 and has an accumulated deficit of $2,188,703 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

It should be noted that as of October 24, 2011 an agreement was made between the majority shareholder Dana J Pekas and BHI Group, Inc. whereby Pekas has agreed to sell shares of common stock to BHI Group, Inc. Also, as of that date, Mr.Pekas has resigned his position as Director, President and Chief Executive Officer of the Company. Replacing him in this role is Mr. Michael Rhodes. It also should be noted that this proposed sale of stock and assumption of debt has not been finalized as of the date of this submission.

 
F-5

 
 
ALLERAYDE SAB, INC.
Notes to the Consolidated Financial Statements
September 30, 2012
(Expressed in US dollars)
(unaudited)
 
2. Summary of Significant Accounting Principles (continued)

Basis of Presentation

These consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States. The consolidated financial statements include the financial statements of the Company and its’ wholly-owned subsidiary, Sea Lion Ocean Freight, LLC. All inter-company transactions and balances have been eliminated upon consolidation.

Interim Financial Statements

These interim unaudited consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future.

Use of Estimates

The preparation of these consolidated financial statements in conformity with US generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, valuation of convertible debt and derivative liabilities, and deferred tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

 
F-6

 
 
ALLERAYDE SAB, INC.
Notes to the Consolidated Financial Statements
September 30, 2012
(Expressed in US dollars)
(unaudited)
 
2. Summary of Significant Accounting Principles (continued)

Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

Revenue Recognition

The Company recognizes revenue in accordance with FASB ASC 605, “Revenue Recognition”. Revenue consists of the sale of recycled metals and demolition services. Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, delivery has occurred or the service has been performed, and collectability is reasonably assured.

Revenues from demolition contracts are recognized on the percentage of completion method. Under this method, revenue is measured by the percentage of costs incurred to date to estimated total costs for each contract. Management considers total cost to be the best available measure of progress on the contracts. Because of the inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change in the near term.

The Company has determined that the percentage of completion method is appropriate due to the following: 1) reasonably dependable estimates have been made, 2) the contract clearly specifies the enforceable rights of both the Company and the client, the consideration to be exchanged, and the manner and terms of settlement, 3) the client can be expected to satisfy its obligations under the contract, and 4) the Company can be expected to perform its contractual obligations.

Contract costs include all direct material, labor, equipment rental and subcontractor costs and certain indirect costs related to contract performance such as supplies, tools, repairs and similar costs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Operating expenses are charged to expense as incurred. Changes in job performance, job conditions, and estimated profitability may result in revisions to costs and revenues in the near term. These changes are recognized in the period in which the revisions are determined.
 
 
F-7

 
 
ALLERAYDE SAB, INC.
Notes to the Consolidated Financial Statements
September 30, 2012
(Expressed in US dollars)
(unaudited)
 
2. Summary of Significant Accounting Principles (continued)

Foreign Currency Translation

The Company’s functional currency and its reporting currency is the United States Dollar. Monetary balance sheet items expressed in foreign currencies are translated into US dollars at the exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at average rates for the period. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.

Earnings Per Share

The Company computes net income per share in accordance with ASC 260, "Earnings The Company computes net income per share in accordance with ASC 260, "Earnings per Share" which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS includes the effects of dilutive convertible debt shares. On January 31, 2013, the Company implemented a 1 for 100 shares reverse split of its issued and outstanding common stock. All share and per share amounts have been retroactively adjusted to reflect the reverse stock split.  Basic and diluted earnings per share have been computed as follows:
 
   
For the nine
   
For the nine
 
   
months ended
   
months ended
 
   
September 30, 2012
   
September 30, 2011
 
             
Numerator for earnings per share - net income (loss)
 
$
616,493
   
$
(295,663
)
                 
Denominator:
               
Denominator for basic earnings per share – weighted
               
average shares
   
786,328
     
757,832
 
Effect of dilutive securities:
               
Convertible debt shares
   
5,856,347
     
4,851,201
 
Denominator for diluted earnings per share
   
6,642,675
     
5,609,033
 
                 
Earnings (loss) per share - basic
 
$
.784
   
$
(.390
)
Earnings (loss) per share - diluted
 
$
.093
   
$
(.053
)
 
 
F-8

 
 
ALLERAYDE SAB, INC.
Notes to the Consolidated Financial Statements
September 30, 2012
(Expressed in US dollars)
(unaudited)

2. Summary of Significant Accounting Principles (continued)

Earnings Per Share (continued)

   
For the three
   
For the three
 
   
months ended
   
months ended
 
   
September 30, 2012
   
September 30, 2011
 
             
Numerator for earnings per share - net income (loss)
 
$
81,496
   
$
(553,718
)
                 
Denominator:
               
Denominator for basic earnings per share - weighted
               
average shares
   
786,328
     
773,240
 
Effect of dilutive securities:
               
Convertible debt shares
   
5,856,347
     
4,851,201
 
Denominator for diluted earnings per share
   
6,642,675
     
5,624,441
 
                 
Earnings (loss) per share - basic
 
$
.104
   
$
(.716
)
Earnings (loss) per share - diluted
 
$
.012
   
$
(.098
)

Comprehensive Income

ASC 220, “Comprehensive Income”, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at September 30, 2012 and 2011, the Company had no items representing comprehensive income.

Income Taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
 
 
F-9

 
 
ALLERAYDE SAB, INC.
Notes to the Consolidated Financial Statements
September 30, 2012
(Expressed in US dollars)
(unaudited)

2. Summary of Significant Accounting Principles (continued)

Financial Instruments and Fair Value Measures

ASC 820, “Fair Value Measurements and Disclosures” and ASC 825, “Financial Instruments” require an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of accounts payable, accrued liabilities, accrued interest payable, loans payable, and convertible debt. Pursuant to ASC 820, the fair value of of derivative liabilities is determined based on “Level 2” inputs, which consists of inputs (volatility, risk free rate, conversion price, quoted market price) that are observable or can be derived principally from, or corroborated by, observable market data which are used in the Black-Scholes calculation. The recorded values of accounts payable and accrued liabilities approximate their current fair values because of their nature and respective maturity dates or durations. The carrying amounts of the convertible note payable and lines of credit approximate fair value because they are priced at interest rates consistent with the Company’s current borrowing rates on similar debt based on the security underlying the debt or the conversion features associated with the debt.
 
 
F-10

 
 
ALLERAYDE SAB, INC.
Notes to the Consolidated Financial Statements
September 30, 2012
(Expressed in US dollars)
(unaudited)
 
2. Summary of Significant Accounting Principles (continued)
 
Recent Accounting Pronouncements

In June 2011, the FASB issued new guidance on the presentation of comprehensive income. Specifically, the new guidance requires an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance. This new guidance is effective for fiscal years and interim periods beginning after December 15, 2011. The adoption of this update did not have a material impact on the financial statements.

3. Related Party Transactions

(a) During the nine months ended September 30, 2012, the Company incurred $nil (2011 - $3,609) for an automobile leased by the former President of the Company.

(b) During the nine months ended September 30, 2012, the Company incurred $nil (2011 - $14,000) in rent to a company controlled by the former President of the Company.

(c) As at September 30, 2012, the Company owed $1,781 (December 31, 2011 - $1,781) to the former President of the Company, which is non-interest bearing, unsecured, and due on demand.

 
F-11

 
 
ALLERAYDE SAB, INC.
Notes to the Consolidated Financial Statements
September 30, 2012
(Expressed in US dollars)
(unaudited)

3. Related Party Transactions (continued)

(d) As at September 30, 2012, the Company owed a total of $395,385 (December 31, 2011 - $395,385) to companies controlled by the former President of the Company. The amount owed is unsecured and due on demand.

(e) During the year ended December 31, 2011 the company defaulted on a line of credit with the bank. A company owned by the former President of the Company was required to make the payments on behalf of the Company. The total paid as of September 30, 2012 is $27,426.

4. Loans Payable

(a) As at September 30, 2012, the Company owed $30,555 (December 31, 2011 - $30,555) to a non-related party which is non-interest bearing, unsecured, and due on demand.

5. Convertible Debt

(a) On February 22, 2010, the Company issued a $250,000 promissory note to the former President of the Company. The note bears interest at 10% per annum, is unsecured, and was due on December 31, 2011. The holder may convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 75% of the average of the closing market price of the Company’s common stock during the five trading days immediately preceding the conversion date.

The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversions feature of $175,081 with an equivalent discount on the convertible debt. The debt was fully accreted as of December 31, 2011. The carrying value of the convertible debt as of September 30, 2012 is $250,000. During the nine months ended September 30, 2012, the Company recorded a gain on the change in fair value of the conversion option derivative liability of $150,981 and as of September 30, 2012, the fair value of the conversion option derivative liability was $nil.

 
F-12

 
 
ALLERAYDE SAB, INC.
Notes to the Consolidated Financial Statements
September 30, 2012
(Expressed in US dollars)
(unaudited)

5. Convertible Debt (continued)

(b) On April 13, 2010, the Company entered into a $250,000 draw down promissory note agreement with a non-related party. Amounts drawn on this credit facility bear interest at 8% per annum, are unsecured, and were due on April 13, 2011. The holder may convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 75% of the average of the closing market price of the Company’s common stock during the thirty trading days immediately preceding the conversion date. On October 14, 2010, the conversion price was changed to be fixed at $0.45 per share.

As of September 30, 2012, the outstanding balance is $250,000. The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $147,140 with an equivalent discount on the convertible debt. The debt was fully accreted as of December 31, 2011.  The carrying value of the convertible debt as of September 30, 2012 is $250,000. As of September 30, 2012, the fair value of the conversion option derivative liability was $nil.

(c) Effective January 31, 2005, the former President of the Company entered into a line of credit agreement with a financial institution allowing for borrowings of up to $800,000 with annual interest at prime to be used to fund the operations of the Company. The line of credit is secured by the principal residence of the former President of the Company. Monthly interest-only payments are required. On October 21, 2010, the Company agreed to add a conversion option to the entire balance of principal and interest outstanding at any time on the line of credit. The former President of the Company may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 75% of the average of the closing market price of the Company’s common stock during the five trading days immediately preceding the conversion date. The maturity date was December 31, 2011.

As of September 30, 2012, the outstanding balance is $788,469 (December 31, 2011 - $788,469). The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $592,991 with an equivalent discount on the convertible debt. The debt was fully accreted as of December 31, 2011.  The carrying value of the convertible debt as of September 30, 2012 is $788,469. During the nine months ended September 30, 2012, the Company recorded a gain on the change in fair value of the conversion option derivative liability of $402,315 and as of September 30, 2012, the fair value of the conversion option derivative liability was $nil.

 
F-13

 
 
ALLERAYDE SAB, INC.
Notes to the Consolidated Financial Statements
September 30, 2012
(Expressed in US dollars)
(unaudited)
 
5. Convertible Debt (continued)

On August 18, 2011 the company defaulted on the payments owed to the financial institution. As a result, UTP Holdings LLC was obligated to make the monthly bank payments on behalf of the company. UTP Holdings LLC notified the company of the default and the payments. The company is recording the additional amounts due to UTP holdings as a current liability.

(d) Effective March 18, 2010, the Company entered into a line of credit agreement with a company owned by the former President of the Company allowing for borrowings of up to $150,000 bearing interest at 8% per annum. The line of credit is unsecured and all borrowings plus interest are due on demand. On October 21, 2010, the Company agreed to add a conversion option to the entire balance of principal outstanding at any time on the line of credit. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 75% of the average of the closing market price of the Company’s common stock during the five trading days immediately preceding the conversion date.

The balance on the line of credit as of September 30, 2012 is $50,300. The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $11,523 with an equivalent discount on the convertible debt. During the nine months ended September 30, 2012, the Company recorded a gain on the change in fair value of the conversion option derivative liability of $27,752 and as of September 30, 2012 the fair value of the conversion option derivative liability was $nil.

(e) On January 20, 2011, the Company issued an 8% convertible note for proceeds of $32,500 which matured on October 24, 2011. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 61% of the average of the three lowest closing market prices during the ten day trading period immediately preceding the conversion date. On July 28, August 2, and August 8, 2011 the holder of this note opted to convert the outstanding amount, including interest, to 3,632,792 shares common stock.

 
F-14

 
 
ALLERAYDE SAB, INC.
Notes to the Consolidated Financial Statements
September 30, 2012
(Expressed in US dollars)
(unaudited)

5. Convertible Debt (continued)

(f) On February 23, 2011, the Company issued an 8% convertible note for proceeds of $37,500 which matured on November 28, 2011. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 61% of the average of the three lowest closing market prices during the ten day trading period immediately preceding the conversion date.

The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $37,500 with an equivalent discount on the convertible debt. The debt was fully accreted as of December 31, 2011. The carrying value of the convertible debt as of September 30, 2012 is $37,500. During the nine months ended September 30, 2012, the Company recorded a gain on the change in fair value of the conversion option derivative liability of $47,489 and as of September 30, 2012, the fair value of the conversion option derivative liability was $nil.

(g) On March 24, 2011, the Company issued an 8% convertible note for proceeds of $27,500 which matured on December 28, 2011. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 61% of the average of the three lowest closing market prices during the ten day trading period immediately preceding the conversion date.

The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $27,500 with an equivalent discount on the convertible debt. The debt was fully accreted as of December 31, 2011. The carrying value of the convertible debt as of September 30, 2012 is $27,500. During the nine months ended September 30, 2012, the Company recorded a gain on the change in fair value of the conversion option derivative liability of $34,605 and as of September 30, 2012, the fair value of the conversion option derivative liability was $nil.
 
 
F-15

 
 
ALLERAYDE SAB, INC.
Notes to the Consolidated Financial Statements
September 30, 2012
(Expressed in US dollars)
(unaudited)
 
5. Convertible Debt (continued)

(h) On May 25, 2011 the Company issued an 8% convertible note for proceeds of $27,500 which matured on February 27, 2012. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 61% of the average of the three lowest closing market prices during the ten day trading period immediately preceding the conversion date.

The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $27,500 with an equivalent discount on the convertible debt. During the nine months ended September 30, 2012, $3,208 has been accreted increasing the carrying value of the convertible debt to $27,500. During the nine months ended September 30, 2012, the Company recorded a gain on the change in fair value of the conversion option derivative liability of $34,151 and as of September 30, 2012, the fair value of the conversion option derivative liability was $nil.

(i) On August 31, 2012 the Company issued a 6% convertible note for proceeds of $20,000 which matures on August 30, 2013. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to the market price of the stock as determined by taking the average trading price of the stock over the previous 30 days.
 
If all of the convertible debt were converted into shares at September 30, 2012, the number of shares would exceed the authorized amount at September 30, 2012.

6. Derivative Liabilities

The conversion options of the convertible debt disclosed in Note 5 are required to record derivatives at their estimated fair values on each balance sheet date with changes in fair values reflected in the statement of operations.

For the convertible debt that has matured but has not yet been satisfied, the debt holders still have the option to convert the debt into common shares. These derivative liabilities are measured at intrinsic value as the related options have no expected life because the related debt is beyond the contracted maturity date.
 
 
F-16

 
 
ALLERAYDE SAB, INC.
Notes to the Consolidated Financial Statements
September 30, 2012
(Expressed in US dollars)
(unaudited)

7. Segmented Information

The Company is organized into segments based on operations. These operating segments have been aggregated into two reportable business segments: sales and ocean freight export services. The reportable segments were determined in accordance with the way that management of the Company develops and executes the Company’s operations.

In accordance with ASC 280, “Segment Reporting, for purposes of business segment performance measurement, the Company does not allocate to the business segments items that are of a non-operating nature or corporate organizational and functional expenses of a governance nature. Corporate expenses consist of corporate office expenses including compensation, automobile, occupancy, depreciation, and other administrative costs.

Assets of the sales segment at September 30, 2011 consist of cash, prepaid expenses, and notes receivable.

For the nine months ended September 30, 2012:

   
Sales
$
   
Export
Services
$
   
Corporate and Other
$
   
Total
$
 
                         
Revenues
   
-
     
-
     
-
     
-
 
Operating net income (loss)
   
-
     
-
     
-
     
-
 
Interest expense
   
-
     
-
     
61,592
     
61,592
 
Depreciation
   
-
     
-
     
-
     
-
 
Total assets
   
-
     
-
     
4,000
     
4,000
 

For the nine months ended September 30, 2011:

   
Sales
$
   
Export
Services
$
   
Corporate and Other
$
   
Total
$
 
                         
Revenues
   
-
     
49,257
     
-
     
49,257
 
Operating net income (loss)
   
-
     
12,744
     
(313,788
)
   
(301,064
)
Interest expense
   
-
     
-
     
67,792
     
67,792
 
Depreciation
   
-
     
-
     
75
     
75
 
Total assets
   
15,940
     
-
     
-
     
15,940
 
 
 
F-17

 
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION

FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

RESULTS OF OPERATIONS

Working Capital
 
   
September 30,
   
December 31,
 
   
2012
 $
   
2011
 $
 
Current Assets
   
-
     
-
 
Current Liabilities
   
2,139,324
     
2,751,817
 
Working Capital Deficit
   
(2,135,324
)
   
(2,751,817
)

Cash Flows
 
   
Nine Months Ended
September 30,
2012
$
   
Nine Months Ended
September 30,
2011
$
 
Cash Flows provided by (used in) Operating Activities
   
-
     
(153,926
)
Cash Flows provided by Investing Activities
   
-
     
3,361
 
Cash Flows provided by (used in) Financing Activities
   
-
     
(16,783
)
Net Increase (decrease) in Cash During Period
   
-
     
(167,348
)

Operating Revenues

Operating revenues for the 3 months ended September 30, 2012 were $-.

Operating revenues for the 3 months ended September 30, 2011 were $-.

Operating revenues for the nine months ended September 30, 2012 were $-.

Operating revenues for the nine months ended September 30, 2011 were $49,257
 
Operating Expenses and Net Loss

Operating expenses for the 3 months ended September 30, 2012 were $16,000 which is comprised of professional fees.

Operating expenses for the 3 months ended September 30, 2011 were $62,322 and is comprised of selling, general, and administrative of $10,424 and professional fees of $51,898.

Operating expenses for the nine months ended September 30, 2012 were $16,000, which is comprised of professional fees..

Operating expenses for the nine months ended September 30, 2011 were $309,693 and is comprised of depreciation of $75, selling, general, and administrative of $51,912 and professional fees of $257,706.
 
 
5

 
 
Net income for the 3 months ended September 30, 2012 was $81,496 which is mainly attributed to the $118,169 gain on change in fair value of derivative liabilities.

Net loss for the 3 months ended September 30, 2011 was ($553,718) which is mainly attributed to the $276,542 loss on change in fair value of derivative liabilities and accretion of discounts on convertible debt of $223,505.

Net income for the nine months ended September 30, 2012 was $616,493 which is mainly attributed to the $697,293 gain on change in fair value of derivative liabilities.

Net loss for the nine months ended September 30, 2011 was ($295,663) which is mainly attributed to operating expenses of $309,693.

Liquidity and Capital Resources

As at September 30, 2012 and December 31, 2012, the Company’s cash balance was $0. The Company’s total assets at September 30, 2012 were $4,000.

As at September 30, 2012, the Company had total liabilities of $2,139,324 compared with total liabilities of $2,751,817 as at December 31, 2011. The decrease in total liabilities is mainly attributed to the decrease in derivative liabilities.

As at September 30, 2012, the Company had a working capital deficit of $2,135,324 compared to a deficit of $2,751,817 as at December 31, 2011.

Cashflows from Operating Activities

During the nine months ended September 30, 2012, the Company used $0 of cash for operating activities compared to $153,926 of cash used by operating activities during the nine months ended September 30, 2011.

Cashflows from Investing Activities

During the nine months ended September 30, 2012, the Company received $0 of cash from investing activities compared to $3,361 for the nine months ended September 30, 2011.

Cashflows from Financing Activities

During the nine months ended September 30, 2012, the Company used $0 of cash in financing activities compared to $16,783 for the nine months ended September 30, 2011.

Going Concern

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.

Off-Balance Sheet Arrangements
 
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

 
6

 
 
Future Financings

We will continue to rely on debt and equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.

Critical Accounting Policies

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
 
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Recently Issued Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES
 
Evaluation of Disclosure Controls and Procedures
 
Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of September 30, 2012, due to the material weaknesses resulting from the Board of Directors not currently having any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K, and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Please refer to our Annual Report on Form 10-K as filed with the SEC on July 23, 2012, for a complete discussion relating to the foregoing evaluation of Disclosures and Procedures.
 
 
7

 
 
Changes in Internal Control over Financial Reporting
 
Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.
 
PART II - OTHER INFORMATION
 
ITEM 1. LEGAL PROCEEDINGS

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
On August 31, 2012, the Company issued a 6% convertible note (the “Note”) for proceeds of $20,000 which matures on August 30, 2013. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to the market price of the stock as determined by taking the average trading price of the stock over the previous 30 days. The Note was issued pursuant to an exemption from the registration requirements under Section 4(2) of the Securities Act of 1933, as amended, for the offer and sale of the Note not involving a public offering.
 
ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE
 
Not applicable.
 
ITEM 5. OTHER INFORMATION

None.

 
ITEM 6.  EXHIBITS
 
Exhibit
Number
 
Description of Exhibit
 
Filing Reference
         
4.1
 
Form of 6% Convertible Promissory Note.*
 
Filed on March 25, 20013 with the Current Report on Form 8-K
         
31.01
 
Certification of Principal Executive and Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.
 
Filed herewith.
         
32.01
 
CEO and CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act.
 
Filed herewith.
 
101.INS
 
XBRL Instance Document
 
Filed herewith.
         
101.SCH
 
XBRL Taxonomy Extension Schema Document
 
Filed herewith.
         
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase Document
 
Filed herewith.
         
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase Document
 
Filed herewith.
         
101.LAB
 
XBRL Taxonomy Extension Label Linkbase Document
 
Filed herewith.
         
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase Document
 
Filed herewith.
 
 
 
8

 
 
SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
ALLERAYDE SAB, INC.
 
     
Dated:  May 6, 2013
/s/ Michael J.Rhodes
 
 
By: Michael J. Rhodes
 
 
Title: President, Chief Executive Officer, Chief Financial Officer, Secretary & Treasurer
 
 
 

EX-31.01 2 f10q0912a2ex31i_allerayde.htm CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT. f10q0912a2ex31i_allerayde.htm
Exhibit 31.01
 
CERTIFICATION

I, Michael J. Rhodes hereby certify that:

 
1.
I have reviewed this Quarterly Report on Form 10-Q/A for the quarter ended September 30, 2012 of Allerayde SAB, Inc.;
 
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
 
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)           Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d)           Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
 
a)           all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)           any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting

Date: May 6, 2013

/s/ Michael J. Rhodes
 
Michael J. Rhodes
 
President, Chief Executive Officer, Chief Financial Officer
 
(principal executive and financial officer)
 
 
EX-32.01 3 f10q0912a2ex32i_allerayde.htm CEO AND CFO CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT. f10q0912a2ex32i_allerayde.htm
Exhibit 32.01
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Quarterly Report of Allerayde SAB, Inc. (the “Company”) on Form 10-Q/A for the period ending September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael J. Rhodes, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
 
(1)        The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2)        The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Michael J. Rhodes
       
By: Michael J. Rhodes
       
Chief Executive Officer and Chief Financial Officer
       
 
Dated: May 6, 2013
 
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
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